The Ebb & Flow of Retail Supply Chain: Is AI The Answer?

This month puts us well past the holiday season, with its tradition of frenzied holiday shopping. For those, the shopping tradition and the weeks after provide an opportunity for bragging rights about the savings I achieved in my holiday bargain hunting starting at Thanksgiving.  At the same time, it marks a good time for electronics retailers to start getting ready for the next big shopping surge.

I think nostalgically of my first experience with holiday shopping after I moved from India to America. A friend and I went to the nearest outlet mall at 4 a.m. on Black Friday and parked in a packed parking lot. There were so many cars that some people parked on the grass. It reminded me of the tradition called the Car Festival in South India.

For Car Festival, people do a procession to honor some very powerful Gods and ritually wash the idol statues in a bath of water, milk, oil, and other things. Next, the statue is dressed in a special costume and made up with a paste made of turmeric. When the idol is consecrated it becomes a god and embodies the power of the divine.  As part of the festival, a car is built out of wood. It is huge, six feet tall. Thousands of people pull the car to the temple. The crush of people, which sometimes turns into a stampede came to me as I looked at the mob crowding this outlet mall.

Now, as someone who knows the business end of the retail space, I find myself thinking about how these shopping festivals impact the back end. Everyone in the retail organization from the crew in the distribution center (DC) to the vice president of retail sales has little control over what hits the DC. Volatility is the nature of the business. That changeability causes supply chain pain.

In the DC, it is common to have a mismatch between the amount of work and the number of workers. The bottom line, though, is that orders need to be fulfilled quickly to satisfy customers. That leaves the DC manager with a number of key questions:

1. How do we manage this ebb and flow in your order fulfillment volume?
2. How do we accurately forecast the necessary labor force? How do we move the work force from one department to another?
3. How do we avoid a knee jerk reaction?
4. What types of tools are available to accurately forecast to allow for the effective handling of sales spikes without damaging the retailer’s brand equity?

Forecasting accuracy becomes a critical component to success. Fortunately, the newest technologies, such as artificial intelligence, have begun to boost that accuracy in the midst of uncertainty. These tools gather data from a variety of sources and can take into account major global happenings, including natural disasters and weather events.  The far reaching impact of such events is hard for humans to predict. Consider a ten day blizzard in Denver. Ten months later, there was a noticeable uptick in babies born on hospitals there. Could a powerful AI tool have predicted that? I am not sure.

These tools can, though, when combined with good data collection about how warehouse workers spend every minute, can help retailers know more than they have in the past. By analyzing workload data and trends, AI can help DC managers forecast labor requirements and trace labor availability. It can help them figure out whether to hire long term experienced employees, or short term temporary help. With tools like www.Hapigig.com and www.wonolo.com, DC managers can:

• Forecast order flow into the DC based on history.
• Forecast labor requirements accurately.
• Send out message blasts to the potential workers’ mobile devices about work force needs.
• Capture a real time rate and spend for such a short term assignment.

Knowledge is a powerful thing, Using the right tools, warehouse managers can make better operational decisions, by balancing worker costs against incoming orders to get products into the hands of customers without compromising on customer satisfaction.

How do you manage the ebb and flow of orders and goods in your warehouse, distribution center and supply chain? We’d love to hear your thoughts in the comments section below.